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Despite the government’s directives to trim homework, many Chinese students still have to attend extra classes even during the Lunar New Year.

Investors pour funds into China online education start-ups

  • Hexiaoxiang and Huowa among Chinese online education start-ups that are raising funds from investors
  • China’s competitive exam-based school system has driven demand for tutoring

Chinese online education platform Hexiaoxiang, which teaches Chinese to pupils aged between 5 and 12, has closed its Series B financing round, collecting 200 billion yuan (US$28 million), according to 36Kr.

The round was led by Sinnovation Ventures, the firm set up by former Google China head Kai-fu Lee, Bertelsmann Asia Investment, and an investment fund under US-listed education company Tomorrow Advancing Life. The new funds will be used on research, education, and AI technology upgrading.

Hexiaoxiang, which is headquartered in Hangzhou, the capital of China’s eastern Zhejiang province, features pre-recorded courses and one-on-one tutoring. Its third main feature is interactive learning among peers, guided by cartoon-based learning material.

The company has more than 1,000 tutors and claims that it has made a monthly revenue exceeding 10 million yuan (US$1.45 million) in the past 15 months.

Online education has become one of the hottest sectors in China’s technology industry, with market leaders like VipKID and Liulishuo delivering lessons via the internet or smartphone. Parents in China are willing to shell out top dollar for tutoring to prepare their children for the country’s gruelling national university entrance exam, called gaokao in Mandarin. The standardised examination score determines which university the high-school students can gain entry to.

Globally, the online education market is predicted to reach US$190 billion this year, according to data from iResearch and Decebo.

Separately, 36kr reported that Beijing-based online education platform Huowa has closed its Series D equity financing round, collecting US$85 million from investors led by GGV and KKR.

Previous investors including Sequoia Capital China and IDG also took part in this round, which is the largest fundraising in China’s online education sector this year.

The new funds will be used on areas including research and development and product upgrading.

Huowa targets those aged between three and 12, offering live-streamed courses aimed to build one’s mathematics and scientific reasoning capabilities. It now has nearly 60,000 learners and more than 1,800 teachers.

–With additional reporting by the Post

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This article appeared in the South China Morning Post print edition as: Investors pour funds into online education